Advertiser Disclosure

Your Guide to Vehicle Service Contracts 

Written by Banks Editorial Team
3 min. read
Written by Banks Editorial Team
3 min. read

Sponsored By

You’re cruising down the highway without a care in the world. Finally, after a few hours of driving, you decide to pull over, take a quick break from driving and grab a cool drink. A few minutes later, you hop back in your ride, put the car in drive and start to drive away for a few seconds before noticing the car isn’t shifting gears properly. 

It’s your worst nightmare – a transmission issue that will cost thousands of dollars to resolve. But if you had a service contract on your vehicle, you could’ve saved a fortune on the repair. 

Get personalized rates for an auto refinance loan and see how much you may save. Skip up to 3 payments.

Check car refinance rates with no fee or obligation. Lower your monthly rates or costs. Click below to get started.

What is a Service Contract on a Vehicle?

A service contract is a plan that kicks in to help cover repair costs when your vehicle warranty expires. It’s often thought of as an extension of the manufacturer’s warranty (or extended warranty). However, some plans provide more or fewer offerings, as determined by the level of coverage you choose. 

What do Service Contracts Usually Cover?

Service contracts typically cover the engine, transmission, drive axle, air conditioning and other major components of the vehicle. Some contracts also offer reimbursement for rental cars while your vehicle is repaired and roadside assistance. 

However, your coverage may be voided if the required repair results from a natural disaster or weather-related incident, automobile accident, or negligence (including failure to have routine maintenance completed at the recommended intervals). You may also be turned away by your vehicle contract service provider if you’re looking to replace a part that’s covered under the manufacturer’s warranty. 

How are Vehicle Service Contracts Different from a Warranty?

The terms vehicle service contract and auto warranties are often used interchangeably, but they aren’t quite the same. 

Auto warranties are included when you purchase a new vehicle – the coverage is referred to as a manufacturer’s warranty. All powertrain components (transmission, engine and drive axle) will be covered up to a specific number of miles or over a set period (whichever comes sooner). All necessary repairs must be performed at an approved dealership or service center. Furthermore, original equipment manufacturer (OEM) parts are used when repairs are made. And if you buy a used car that’s still covered under the manufacturer’s warranty, these protections are available to you. 

Vehicle service contracts can provide identical coverage that comes with manufacturer’s warranties, or they can be tailored to only cover certain components. Furthermore, repairs are completed by an approved third-party service provider under a vehicle service contract. You can purchase an auto service contract at any time from a dealer, auto manufacturer or private company for a new or used vehicle. 

Get personalized rates for an auto refinance loan and see how much you may save. Skip up to 3 payments.

Check car refinance rates with no fee or obligation. Lower your monthly rates or costs. Click below to get started.

Two Types of Vehicle Service Contracts

There are two types of vehicle service contracts to be aware of. 

Regular Contract

Regular service contracts can be customized to provide as much or as little coverage as you need for your vehicle. 

Exclusionary Contract

Exclusionary contracts provide the most in-depth level of coverage for vehicles that are outside of the manufacturer’s warranty. It’s often referred to as a bumper-to-bumper warranty. 

Benefits of Vehicle Service Contracts

Before deciding if a vehicle service contract is right for you, here are some key benefits to consider: 

  • You can save hundreds or thousands of dollars on costly repairs. 
  • You can select a plan that provides the level of coverage you need. 
  • You can have peace of mind knowing you’re protected against steep auto repair bills. 
  • You may not have to spend a fortune to secure some form of coverage. 

How Much Do Vehicle Service Contracts Cost?

Expect to spend anywhere from $1,500 and $400 on a service contract. The exact price point vehicle service contract providers charge depends on the level of coverage you select and the duration of the contract, along with the year, condition, make and model of your vehicle. 

Consider Refinancing to Save Money to Pay for Your New Vehicle Service Contract

It’s possible to add a service contract to your vehicle without having to fork over several hundred or thousands of dollars. Instead, you can refinance with a lender in the Auto Approve network and get an interest rate as low as 2.94 percent. 

Even better, you can add a vehicle protection plan to your new auto loan and roll the cost into your monthly payment. You’ll also get access to these exclusive perks: 

  • Courtesy towing and rental-car reimbursement of up to $50 per day that your car is at a repair facility having repair work done
  • The ability to select an ASE-certified mechanic at a repair shop in the U.S. that you like to work on your vehicle
  • Hassle-free direct payments from Auto Approve to the mechanic who repairs your car 
  • 24/7 roadside assistance for those times when you experience a mechanical breakdown

Get a loan quote today to see how much you can save by refinancing with Auto Approve. It’s simple to get started and won’t impact your credit score. 

Get personalized rates for an auto refinance loan and see how much you may save. Skip up to 3 payments.

Check car refinance rates with no fee or obligation. Lower your monthly rates or costs. Click below to get started.

You may also like

Torn between purchasing or leasing your next vehicle? Learn the differences here, to decide which option is right for you.
Read more

Advertisement Disclosure

Product name, logo, brands, and other trademarks featured or referred to within are the property of their respective trademark holders. This site may be compensated through third party advertisers. The offers that may appear on’s website are from companies from which may receive compensation. This compensation may influence the selection, appearance, and order of appearance of the offers listed on the website. However, this compensation also facilitates the provision by of certain services to you at no charge. The website does not include all financial services companies or all of their available product and service offerings.